“All that is left now is to offer a profound apology for disappointing you and, ultimately, for letting you down,” Jeffrey Katzenberg and Meg Whitman wrote, closing out an open letter posted to Medium. “We cannot thank you enough for being there with us, and for us, every step of the way.”
With that, the founding executives confirmed the rumors and put Quibi to bed, a little more than six months after launching the service.
Starting a business is an impossibly difficult task under nearly any conditions, but even in a world that’s littered with high-profile failures, the streaming service’s swan song was remarkable for both its dramatically brief lifespan and the amount of money the company managed to raise (and spend) during that time.
A month ahead of its commercial launch, Quibi announced that it had raised another $750 million. That second round of funding brought the yet-to-launch streaming service’s funding up to $1.75 billion — roughly the same as the gross domestic product of Belize, give or take $100 million.
“We concluded a very successful second raise which will provide Quibi with a strong cash runway,” CFO Ambereen Toubassy told the press at the time. “This round of $750 million gives us tremendous flexibility and the financial wherewithal to build content and technology that consumers embrace.”
Quibi’s second funding round brought the yet-to-launch streaming service’s funding up to $1.75 billion — roughly the same as the gross domestic product of Belize, give or take $100 million.
From a financial perspective, Quibi had reason to be hopeful. Its fundraising ambitions were matched only by the aggressiveness with which it planned to spend that money. At the beginning of the year, Whitman touted the company’s plans to spend up to $100,000 per minute of programming — $6 million per hour. The executive proudly contrasted the jaw-dropping sum to the estimated $500 to $5,000 an hour spent by YouTube creators.
For Whitman and Katzenberg — best known for their respective reigns at HP and Disney — money was key to success in an already crowded marketplace. Indeed, $1 billion was a drop in the bucket compared to the $17.3 billion Netflix was expected to spend on original content in 2020, but it was a start.
Following in the footsteps of Apple, who had also recently announced plans to spend $1 billion to launch its own fledgling streaming service, the company was enlisting A-List talent, from Steven Spielberg, Guillermo del Toro and Ridley Scott to Reese Witherspoon, Jennifer Lopez and LeBron James. If your name carried any sort of clout in Hollywood boardrooms, Quibi would happily cut you a check, seemingly regardless of content specifics.
Quibi’s strategy primarily defined itself by its constraints. In hopes of attracting younger millennial and Gen Z viewers, the company’s content would be not just mobile-first, but mobile-only. There would be no smart TV app, no Chromecast or AirPlay compatibility. Pricing, while low compared to the competition, was similarly off-putting. After a 90-day free trial, $4.99 got you an ad-supported subscription. And boy howdy, were there ads. Ads upon ads. Ads all the way down. Paying another $3 a month would make them go away.
Technological constraints and Terms of Service fine print forbade screen shots — a fundamental understanding of how content goes viral in 2020 (though, to be fair, one shared with other competing streaming services). Amusingly, the inability to share content led to videos like this one of director Sam Raimi’s perplexingly earnest “The Golden Arm.”
It features a built-on laugh track from viewers as Emmy winner Rachel Brosnahan lies in a hospital bed after refusing to remove a golden prosthetic. It’s an allegory, surely, but not one intentionally played for laughs. Many of the videos that did ultimately make the rounds on social media were regarded as a curiosity — strange artifacts from a nascent streaming service that made little sense on paper.
Most notable of all, however, were the “quick bites” that gave the service its confusingly pronounced name. Each program would be served in 5-10 minute chunks. The list included films acquired by the service, sliced up into “chapters.” Notably, the service didn’t actually purchase the content outright; instead, rights were set to revert to their creators after seven years. Meanwhile, after two years, content partners were able to “reassemble” the chunks back into a movie for distribution.
In March, the service announced its first slate of 50 shows — less than a third of the programming it announced for its first year. It was a curious collection of shows that appeared to be green-lit by a malfunctioning algorithm; Chrissy Teigen was a small-claims judge and Nicole Richie’s “hip-hop alter-ego” Nikki Fre$h chatted with wellness practitioners.
Reese Witherspoon narrated a series of short nature documentaries about female animals called “Fierce Queens.” There was a pasta show called “The Shape of Pasta” and an HGTV-style show called “Murder House Flip,” wherein the hosts renovated homes in which people had been murdered.
The four scripted shows announced (of 50) looked slightly better. Sophie Turner and Corey Hawkins were the lone survivors of a plane crash in some remote wildness. Will Forte and Kaitlin Olson stumbled on cartel boss Andy Garcia’s drug money while renovating his house. Liam Hemsworth was a terminally ill man who “enters a deadly game where he is not the hunter, but the prey. Christoph Waltz also stars.”
Then there were the roughly two-dozen daily news — or, at very least, news-adjacent — shows. Those were the byproduct of another odd element of Quibi’s strategy to differentiate itself. In a bold move, the company would return to the “appointment viewing” Netflix, Hulu and the rest of the streaming world had left to wither in the broadcast dustbin of history. Katzenberg argued that the service would succeed by filling in those moments during the day when people are away from the television — presumably on breaks from work.
“Our [service] is exclusively about what you do from 7 a.m. to 7 p.m. on your phone,” the executive told Vanity Fair. “And what you’re doing today, if you’re in our core demographic of 25- to 35-year-olds, is you’re actually watching 60-70 min of YouTube, Facebook, Instagram and Snapchat. That growth is now a well-established consumer habit that Quibi is sailing into.”
But there was a storm on the horizon. A month before the service was set to launch, California Governor Gavin Newsom declared a state of emergency, amid growing concerns over the highly contagious — and deadly — novel coronavirus, COVID-19. The week prior to launch, Quibi’s news head Ryan Kadro (a former producer for CBS This Morning) described the launching a massive slate of daily programming under lockdown orders.
“All the shows are delivering at set times to the platform: we have a batch at 6.30 a.m., a batch at noon, and a batch at 5 p.m. (all ET),” he told Deadline. “Yesterday we made the decision to move the 5 p.m. shows back to 6 p.m. One of the reasons is that people aren’t necessarily commuting, and it also allows us more time for the editorial control to take shape. But as Jeffrey pointed out recently, everyone still needs to have moments in the day where they step away from teaching their kids, or Zoom meetings. There’s definitely opportunities for people to Quibi.”
Quibi launched on April 6, racking up 300,000 downloads on iOS. That was enough to hit No. 3 in the App Store. By early the following month, it dropped 122 spaces, according to figures from Sensor Tower. In a video interview with The New York Times on May 11, Katzenberg appeared distraught. “I attribute everything that has gone wrong to coronavirus,” he told the paper. “Everything. But we own it.”
Like the rest of the world, COVID-19 had thrown the nascent streaming service for a loop. Sensor Tower’s figures put installations at 2.9 million, thanks in large part to the free trial. Katzenberg quibbled a bit with those figures, placing them closer to still unspectacular 3.5 million, with 1.3 million active users.
“Is it the avalanche of people that we wanted and were going for out of launch?” he asked rhetorically. “The answer is no. It’s not up to what we wanted. It’s not close to what we wanted.”
In an article published the following day, Whitman acknowledged the service’s struggles, but sounded generally less defeatist than her colleague, stating that she was happy with what Quibi had done in its first month. “You have to remember, we’re a new brand with original content, a new tech platform that was built from the ground up,” she told CNN. “We came to market with no library, no legacy product and we’re starting from scratch.”
Rose-colored glasses non-withstanding, Whitman’s assessment at least got closer to some of the underlying issues. The virus no-doubt impacted some of the ways users engaged with the service — people weren’t watching one of its dozens of news shows while commuting, for instance. Those changed habits could certainly have a profound impact on news consumption.
But the pandemic also presented a tremendous opportunity for the service. Suddenly much of the world found itself unable or unwilling to leave their homes. Within the first 10 days of its release, a Netflix true crime documentary miniseries about the eccentric owners of Florida tiger sanctuaries had racked up 45.3 million views for Netflix, making it one of the service’s most widely viewed original series. The world was clearly starved for content.
Quibi saw a few wins. In July, the service was nominated for 10 Emmys across three short-form awards categories. “#FreeRayshawn,” a scripted series about about an Iraq War vet co-starring Laurence Fishburne, won two.
And in late May, the service sought to right the sinking ship by adding AirPlay and Chromecast support. In September, screenshotting was introduced — albeit through a slightly convoluted proprietary method. Chief product officer Tom Conrad blamed DRM issues. “Quibi has screenshots, kinda,” he explained on Twitter. “Of course, it wouldn’t be Quibi if we didn’t give the Twitterverse something to dunk on, so here’s the opening: it’s not your grandfather’s screenshotting.”
The constraints Quibi’s creators intentionally instituted in order to set the service apart ultimately played a large roll in hobbling a service that no one seemed to really want in the first place. Its answer — and arguably only reasonable recourse — was to introduce common features already found on other streaming media offerings.
There was also a long, drawn-out legal battle over software technology, dating back to before launch. And in June, Quibi asked its senior executives to take a 10% salary cut and reportedly discuss laying off around 10% of its employees. The company confirmed the former, while denying deep-seated fractures that were visible since shortly after launch.
“Quibi is in a good financial position,” a spokesperson for the company told the press. “We are not laying off staff as a part of cost-saving measures. We just added a dozen new employees.” Katzenberg called COVID-19 “a little bit of a cement wall that we ran into,” adding, “But I’m quite optimistic that this use case is going to work[…]People are loving this.”
Three months later, Quibi confirmed the rumors. It would be shutting down. In their open letter, Katzenberg and Whitman no longer pinned the service’s failure entirely on the virus.
“Quibi is not succeeding. Likely for one of two reasons: because the idea itself wasn’t strong enough to justify a standalone streaming service or because of our timing,” the wrote. “Unfortunately, we will never know but we suspect it’s been a combination of the two. The circumstances of launching during a pandemic is something we could have never imagined but other businesses have faced these unprecedented challenges and have found their way through it. We were not able to do so.”
The same day the announcement was made to the public, Quibi held a staff video call. The Wall Street Journal notes that an “emotional” Katzenberg suggested employees listen to “Get Back Up Again.” The song, sung by Anna Kendrick, originated in the 2016 animated film, “Trolls,” produced by DreamWorks, a company he co-founded.
The service’s leadership had reportedly tried and failed to find a buyer, which had amassed around 500,000 paying customers during its short life. Apple, Warner and Facebook are all believed to have been approached.
Yesterday Quibi issued a brief “End of Service Announcement,” writing, “We anticipate that the service will end streaming on or about December 1, 2020. We appreciate the support we have received from our customers and want to thank you for giving us an opportunity to entertain you.”
It added that, “At this time we do not know if the Quibi content will be available anywhere after our last day of service.”
During the “Trolls” call, Katzenberg reportedly told the staff that of the $1.75 billion the company raised, it would be returning $350 million to shareholders. As Anna Kendrick famously sang, while being chased by some weird snakelike sock creature, “Some super fun surprise around each corner / Just riding on a rainbow / I’m gonna be okay.”